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A Strategic Study Of The European EMS Industry

World

THE EUROPEAN ELECTRONIC MANUFACTURING SERVICES INDUSTRY

2010 - 2015

The European EMS Industry 2010-2015

2

The Complete guide to the European Electronic manufacturing Services Industry

The European Electronic Manufacturing Services (EMS) Industry is forecast in 2011 to increase by 6.4% over

2010 across total Europe. However, the rate of growth 2011 versus 2010 in Western Europe is expected to be

2.7% and for Central & Eastern Europe and other nearby low cost countries it is expected to be 9.2%. As we

forecast in the 2009 edition, the industry which suffered reductions in revenues, during the 2008-9 recession has

recovered somewhat during 2010 and early 2011. We expect that total revenues in ‘CEE and Other’ to be back to

2007 levels by 2012 but revenues in Western Europe are unlikely to reach those of 2007 within the time frame of

this report. We do expect growth in both the Western European and CEE & Other regions across the time frame

of the report but the economy of many major Western European countries has slowed in recent months and the

forecast for Gross Domestic Product (GDP) in most leading economies has been downgraded.

The shift of electronic production from the higher labour cost Western Europe to Central & Eastern Europe has

continued and indeed accelerated over the last 2 years. As the cost of electronic assembly became probably the

most important element for Original Equipment Manufacturers (OEM) so EMS companies shifted much of the

production to factories in lower cost areas and even though economic conditions have since improved, that

production has not returned to Western European plants. By 2015, the end of our forecast period, we expect that

‘CEE & Other’ will account for more than 60% of all European electronic production, up from an estimated 57% at

the end of 2010.

Group 1 EMS companies, typically with global operations and sales turnovers in billions of Euro have continued

to migrate the remaining production of Consumer, Computer and Mobile Communications (3C) products to lower

cost countries. There has been an increase in the number of Group 2 and Group 3 EMS companies operating

lower cost manufacturing plants as they seek to provide greater value to their customers. All of these three

groups have retained some manufacturing and the greater part of the design, development and sales teams in

Western Europe to maintain relationships with the OEM’s based in that area. Group 4 Ems companies in our

definition, are small and operate nationally and possibly in niche sectors.

We expect to see the low volume/high mix sectors of Automotive, Medical, Control & Instrumentation, Industrial

and Telecommunications (AMCIT) grow in Western Europe by between 2.8% to 4.4%. In total we estimate that

there are more than 720 companies across all groups of EMS companies and we expect to see further

consolidation of this number as competition in Western Europe in the AMCIT sectors increases. Some

companies are still at lower sales turnover in 2010 than for previous years and although many companies have

restructured their operations to match lower sales, some are still recovering their financial position and vulnerable

to further difficult economic conditions. Electronic production, specifically automated board assembly is beginning

to become commoditised and all EMS companies will be looking to increase margins by the provision of

additional services throughout the lifetime of the product.

The tenth edition of The European EMS Industry report 2010-2015 highlights the issues impacting the

European EMS industry. This comprehensive report provides:-

An analysis and revenue forecasts for both West and East and Central Europe in a single report.

The key trends impacting the major EMS companies by market group.

Detailed profiles of the Top 20 European EMS companies, including a ranking for 2010.

Country and regional profiles including key trends, the role of the Global “Tier 1” companies and profiles

of the major EMS companies.

A directory of over 1,000 plus manufacturing locations.


3

Who will benefit

The Electronics Manufacturing Services (EMS) industry report is essential research for all areas of the electronics

industry including:

Distributors and manufacturers of electronic components and materials - the profiles and directory provide

a detailed analysis of potential customers, highlights growth markets by sector and country/region. The

understanding and interpreting of the market trends will also be important as this market further develops.

Production equipment suppliers – the profiles and directory provide a detailed analysis of potential customers,

track key EMS trends and provide location information.

OEMs – A comprehensive guide to the major EMS companies in Europe in detail and further listing of EMS

companies by geographic location. We analyse the structure of the industry and the emergence of the four

distinct groups of EMS company.

EMS – The report provides a complete overview of the European EMS industry, including revenue forecasts by

country, competitor information and the trends which will have an impact on business in the period from 2011 to

2015.

Other organizations which will benefit from the report include:

Government, including investment organizations.

Financial and industry analysts.

Academic institutes & universities tracking developments in the electronics industry.

Europe will continue to provide significant opportunities for companies already involved in the European EMS

industry. It will also offer opportunities for companies in Asia and the Americas who are looking to expand

geographically into new markets.

The European EMS Industry report allows you to track these developments in a single cost-effective study

providing both detailed market and company analysis.

For additional information contact:

Anita Caird, Sales Manager

[email protected]

Andrew Fletcher, Research Manager

[email protected]

Reed Electronics Research

Harvard House

Grove Technology Park

Wantage

Oxfordshire

OX12 9FF

United Kingdom

Tel +44 (0) 1235 227310

Fax +44 (0)1235 868620

Website :- www.rer.co.uk


4

Contents

1 Introduction 9

2 Executive Summary 11

3 The European Market for Electronic Manufacturing Services (EMS) 21

3.1 The Market in Context – Global and Regional Trends (PESTLE) 21

3.2 The Market for EMS in Europe 27

3.2.1 Why Outsource? 27

3.2.2 Forecast for EMS Revenues by Country and Regions 27

3.2.2.1 Western Europe 30

3.2.2.2 Central & Eastern Europe & Other 31

3.2.2.3 Europe EMS Revenues by Country 32

3.2.3 EMS Revenues by Market Sector 34

3.2.3.1 Western Europe 35

3.2.3.2 CEE & Other 36

3.2.3.3 Europe 37

3.2.3 4 Sector Commentary 37

3.2.3.5 Aerospace & Defence 37

3.2.3.6 Consumer including Mobile 39

3.2.3.6 Communications & Networks 40

3.2.3.7 Computer 40

3.2.3.8 Medical 40

3.2.3.9 Automotive 41

3.2.3.10 Control & Instrumentation 43

3.2.3.11 Industrial 44

3.3 Analysis of the EMS Market in Europe 45

3.3.1 Overview 45

3.3.2 The Four Principal Market Groups of EMS Companies 45

3.3.3 Key Components of success for EMS Companies 47

3.3.3.1The Challenges of Distance & Culture 47

3.3.3.2 Flexibility in Manufacture, Supply and Service 48

3.3.3.3 Relationship Management with the OEM and Suppliers 49

3.3.3.4 People, Processes and Profitability 51

3.4 The Key Drivers of the European EMS Industry 51

3.4.1The EMS Industry Post Recession 51

3.4.2 The Competitive Environment 52

3.4.3 Cost per unit versus Total Cost of Supply 53

3.4.4 Delivery Value to the OEM 53

3.5 The Future for EMS in Europe 54

3.5.1 A New Reality - Rebuilding 54

3.5.2 Leveraging Competences and Capabilities 55

3.5.3 Sector and Services 58

3.5.4 Strategies for the Future 59

4 Major EMS providers in Europe 61

4.1 Industry Structure 61

4.2 Top Twenty Table 70

4.3 Profiles of the Top Twenty EMS Companies in Europe 71

4.3.1 Foxconn 71

4.3.2 Flextronics 72


5

4.3.3 Jabil 78

4.3.4 Elcoteq 82

4.3.5 Zollner Elektronik 87

4.3.6 Celestica 89

4.3.7 Sanmina-SCI 91

4.3.8 Enics 94

4.3.9 Videoton 97

4.3.10 Neways 99

4.3.11 Kimball Electronics 102

4.3.12 éolane 104

4.3.13 PartnerTech 106

4.3.14 Kitron 111

4.3.15 SRI Radio Systems 115

4.3.16 AsteelFlash 115

4.3.17 Selcom 116

4.3.18 ElectronicNetwork 117

4.3.19 Lacroix Electronics 118

4.3.20 Connect Group 120

5 European EMS Industry by Country/Region 123

5.1 France 123

5.1.1 Electronics Industry Overview 123

5.1.2 EMS Market & Industry Trends 124

5.1.3 Global “Tier 1” Companies 125

5.1.4 Other Leading EMS Companies in France 125

5.1.4.1 AsteelFlash 125

5.1.4.2 Cofidur 126

5.1.4.3 éolane 126

5.1.4.4 Lacroix Electronics 127

5.1.4.5 Matra Electronique 127

5.1.4.6 MSL Circuits 127

5.1.4.7 Novatech 127

5.1.4.8 Sagemcom 128

5.1.4.9 Selha 128

5.1.4.10 Tronico 128

5.2 Germany 129




5.2.4 Other Leading EMS Companies in Germany 132

5.2.4.1 bebro electronic 132

5.2.4.2 BMK Group 133

5.2.4.3 BuS Elektronik 133

5.2.4.4 ElectronicNetwork 133

5.2.4.5 Ihlemann 134

5.2.4.6 Katek 134

5.2.4.7 Lacroix Electronics 134

5.2.4.8 manufacturing, logistics & services 134

5.2.4.9 Neways 135

5.2.4.10 Prettl Elektronik 135

5.2.4.11 Rafi-Eltec 136

5.2.4.12 Rob Electronic 136

5.2.4.13 RSG-Elotech 137

5.2.4.14 SRI Radio Systems 137


6

5.2.4.15 TQ-Group 138

5.2.4.16 Xenterio 139

5.2.4.17 Zollner 140

5.3 Southern Europe 140



5.3.3 Tier 1 Global EMS Providers 142

5.3.4 The Leading EMS Providers in Southern Europe 143

5.3.4.1 EAS Electtronica 143

5.3.4.2 Elemaster 143

5.3.4.3 Eutron 144

5.3.4.4 Fagor 144

5.3.4.5 GDS 144

5.3.4.6 Selcom 145

5.3.4.7 Trelec 145

5.4 Nordic Countries 145




5.4.4 Other Leading EMS Companies to the Nordic Countries 148

5.4.4.1 BB Electronics 148

5.4.4.2 Darekon 149

5.4.4.3 Elcoteq 150

5.4.4.4 GPV 150

5.4.4.5 Hadeland Produkter AS (HAPRO) 151

5.4.4.6 Hanza 151

5.4.4.7 Incap 152

5,4.4.8 Inission 154

5.4.4.9 Kitron 154

5.4.4.10 NOTE 154

5.4.4.11 Norautron 157

5.4.4.12 PartnerTech 158

5.4.4.13 PKC 158

5.4.4.14 Rimaster 159

5.4.4.15 Scanfil 159

5.5 United Kingdom 162


5.5.2 UK EMS Market & Industry Trends 163

5.5.3 Global “Tier 1” EMS Companies 164

5.5.4 Other Leading EMS Companies in the UK 164

5.5.4.1 ACW Technology 164

5.5.4.2 AWS Electronics 165

5.5.4.3 Axiom Manufacturing Services 166

5.5.4.4 Chemigraphic 166

5.5.4.5 CTS Corporation 167

5.5.4.6 Exception EMS 167

5.5.4.7 Ferranti Technologies 168

5.5.4.8 PartnerTech 168

5.5.4.9 Plexus 169

5.5.4.10 SMS Electronics 170

5.5.4.11 Stadium Electronics 170

5.5.4.12 Surface Technology International 171

5.5.4.13 TT electronics 171

5.5.4.14 Ultra Electronics CEMS 172


7

5.6 Rest of West Europe 173




5.6.4 Other Leading EMS Companies in the Rest of Western Europe 176

5.6.4.1 BECOM 177

5.6.4.2 Asetronics 177

5.6.4.3 Benchmark Electronics 178

5.6.4.4 CCS Holdings/Adaxys 179

5.6.4.5 Cicor Technologies 180

5.6.4.6 cms electronics 181

5.6.4.7 Connect Group 182

5.6.4.8 Enics 182

5.6.4.9 EPIQ 182

5.6.4.10 MELECS 183

5.6.4.11 Neways 183

5.6.4.12 Seidel Elektronik 183

5.6.4.13 tbp electronics 184

5.7 Central and Eastern Europe 185



5.7.3 Global “Tier 1” Suppliers 188

5.7.4 Other Leading EMS Companies in Central & Eastern Europe 189

5.7.4.1 Assel 190

5.7.4.2 Fideltronik 190

5.7.4.3 Integrated Microelectronics Inc 191

5.7.4.4 Kimball 191

5.7.4.5 SIIX 191

5.7.4.6 Videoton 192

6 Directory 193

6.1 Austria 193

6.2 Belgium 194

6.3 Bulgaria 197

6.4 Czech Republic 198

6.5 Denmark 203

6.6 Estonia 207

6.7 Finland 209

6.8 France 214

6.9 Germany 223

6.10 Greece 245

6.11 Hungary 246

6.12 Ireland 249

6.13 Israel 251

6.14 Italy 252

6.15 Latvia 257

6.16 Lithuania 258

6.17 Malta 258

6.18 Morocco 258

6.19 Netherlands 259

6.20 Norway 262

6.21 Poland 264

6.22 Portugal 268

6.23 Romania 269


8

6.24 Russia 272

6.25 Slovakia 273

6.26 Slovenia 274

6.27 Spain 275

6.28 Sweden 278

6.29 Switzerland 284

6.30 Tunisia 288

6.31 Turkey 289

6.32 Ukraine 289

6.33 United Kingdom 290

7 Appendix 319

7.1 Top 50 EMS Providers 2010 319

7.2 Exchange Rates 321

Tables

Table 2.1 EMS Revenues for Western Europe and CEE 2010-2015 11

Table 2.2 The Top 20 European EMS Companies 14

Table 3.1 EMS Revenues for Western Europe and CEE 2010-2015 28

Table 3.2 Percentage of European EMS by Region 2010-2015 29

Table 3.3 EMS reveniues Nordic, Benelux, Germany & UK 2010-2015 30

Table 3.4 EMS Revenues France, Southern Europe, Switzerland & Other 2010-2015 31

Table 3.5 EMS Revenues for CEE & Other 2010-2015 32

Table 3.6 European EMS Revenues by Country 2010-2015 33

Table 3.7 Comparison of European Labour Costs 2009 34

Table 3.8 Western Europe EMS Revenues by Market Sector 2010-2015 35

Table 3.9 CEE & Other EMS Revenues by Market Sector 2010-2015 36

Table 3.10 European EMS Revenues by Market Sector 2010-2015 37

Table 4.1The Top 20 European EMS Companies 2010 70

Table 5.1 Summary of French Electronics Equipment Production 2006-2014 123

Table 5.2 French EMS Revenues 2010-2015 124

Table 5.3 Summary of German Electronics Production 2006-2014 129

Table 5.4 German EMS Revenues 2010-2015 131

Table 5.5 Summary of Southern Europe Electronics Production 2006-2014 140

Table 5.6 Southern Europe EMS Revenues 2010-2015 142

Table 5.7 Summary of Nordic Electronics Production 2006-2014 145

Table 5.8 Nordic EMS Revenues 2010-2015 147

Table 5.9 Summary of UK Electronics Production 2006-2014 162

Table 5.10 UK EMS Revenues 2010-2015 164

Table 5.11 Summary of Rest of West Europe Electronics Production 2006-2014 174

Table 5.12 Rest of West Europe EMS Revenues 2010-2015 175

Table 5.13 Central & Eastern Europe EMS Revenues 2010-2015 187

Table 7.1The Top 50 European EMS Providers 2010 319

Figures

Figure 2.1EMS Revenues for Western Europe and CEE 2010-2015 11

Figure 2.2 European EMS Revenues by Market Sector 2010-2015 12

Figure 3.1EMS Revenues for Western Europe and CEE 2010-2015 28

Figure 3.2 Percentage of European EMS by Region 2010-2015 29

Figure 3.3 EMS revenues Nordic, Benelux, Germany & UK 2010-2015 30

Figure 3.4 EMS Revenues France, Southern Europe, Switzerland & Other 2010-2015 31

Figure 3.5 EMS Revenues in the CEE & Other 2010-2015 32


9

Figure 3.6 Western European EMS Revenues by Market Sector 2010-2015 35

Figure 3.7CEE & Other EMS Revenues by Market Sector 2010-2015 36

Figure 3.8 European EMS Revenues by Market Sector 2010-2015 37

Figure 3.9 Moving Annual Total of New passenger Car Registrations EU (27 & EFTA) 41

Figure 3.10 European Electronics Content by Car Type 42

Figure 3.11 The European Automotive Electronics Market by Country 43

Figure 3.12 Strategic Space Analysis for the 4 EMS Groups 45

Figure 3.13 EMS Groups and Sales per Group 2010 46

Figure 3.14 Break Even Cost & Cash Flows – Case 1 56

Figure 3.15 Break Even Cost & Cash Flows – Case 2 57

Figure 3.16 Competition in the European EMS Industry across Sectors 59

Figure 5.1 French Electronics Production - % Growth by Sector 2009-2014 123

Figure 5.2 French EMS Revenues 2010-2015 125

Figure 5.3 German Electronics Production - % Growth by Sector 2009-2014 130

Figure 5.4 German EMS Revenue 2010-2015 132

Figure 5.5 Southern Europe Electronics Production - % Growth by Sector 2009-2014 141

Figure 5.6 Southern Europe EMS Revenues 2010-2015 142

Figure 5.7 Nordic Electronics Production - % Growth by Sector 2009-2014 146

Figure 5.8 Nordic EMS Revenues 2010-2015 147

Figure 5.9 UK Electronics Production - % Growth by Sector 2009-2014 162

Figure 5.10 UK EMS Revenues 2010-2015 164

Figure 5.11 Rest of Western Europe Electronics Production - % Growth by Sector 2009-2014 174

Figure 5.12 Rest of Western Europe EMS Revenues 2010-20135 176

Figure 5.13 CEE Electronics Production by Country 2010 186

Figure 5.14 Central & Eastern Europe EMS Revenues 2010-2015 188


10

1 Introduction 1.1 Scope & Methodology This is the tenth edition of the European Electronic Manufacturing Services Industry report (previously titled the

Profile of the European Contract Electronic Assembly Industry) and updates the ninth edition, which was

published in August 2009. Although building on the database of information which has been gathered since the

publication of the first edition in 1993 the new report has been fully revised with greater emphasis being placed

on analyzing the EMS providers and the key trends which will impact the industry in the period to 2015.

As in the previous reports, EMS is defined as electronic manufacturing offered as a service to other companies. It

does not include the in-house activities of companies, which also provide an EMS service. The production of the

printed circuit board is to some extent included, since some EMS companies have acquired PCB production

capabilities and all are often involved in the design aspects of the PCB layout when offering design services as

part of the EMS activity.

The generation of the market numbers has been completed using both a ‘bottom up’ approach where details of

EMS companies have been accumulated from all sizes of companies, and a ‘top down’ view of published data

from a variety of sources. Statistical information which was obtained from government departments, trade

associations, company annual reports and various other publications, and in particular the Yearbook of World

Electronics Data, was combined with data obtained from individual companies, to evaluate the state of the market

and future developments. The previous report along with data from RER’s database were used as a base point in

evaluating market developments during interviews with key personnel of a cross-section of EMS companies.

Further information was obtained by Questionnaires in personal and telephone interviews.

Forward looking forecasts are constructed from the last full reported year (2010) and include known information

to date on EMS company activities such as collaborations, mergers, acquisitions and closures. These forecasts

also include information from EMS and other companies on their expectations for growth in the coming years.

For sales to individual sectors such as computer, communications, mobile etc, we have used information from the

companies themselves either in the main from published accounts or from known information about plant

specialization, number of employees etc.

Annual reports, company brochures and corporate literature were collected from over 200+ EMS companies.

Where information of a confidential nature was obtained, this was used solely to evaluate market trends in

product and end-user sectors. In addition a further 500 plus companies, primarily the smaller national EMS

providers, were checked for the directory.

The consultants also visited relevant trade shows including Productronica 2009 and Electronica 2010 in Munich;

the UK-based NEW Electronics exhibition in 2010 and 2011 and SMT & Hybrid 2010 and 2011 in Nürnberg,

Germany.

Where applicable local currencies have been converted to Euro values. The forecasts assume constant Euro

values. The Euro values used in the report are given in the Appendix.

Original Design Manufacturers (ODM) and Electronic Manufacturing Services (EMS)

The key differentiator between the two types of organisations is that ODM’s own intellectual property as well as

providing electronic manufacturing services. The EMS is considered to only provide the manufacturing services.

In Asia, there are large manufacturing services who also own intellectual property in the products that are sold as

branded products by the OEM. Whilst there are companies in Europe that do offer the ODM service and state

that ODM sales have been made, it is frequently not separated from the overall sales in Europe in its published

form.


11

Given the difficulty in separating out specific ODM sales data, we have incorporated this within the total EMS

sales. From the research we would estimate that the total ODM element is approximately 5-10% of the total EMS

values and mainly within the top 20 companies.

1.2 Report Structure

Following the Executive Summary, Section 3 provides a detailed analysis of the trends impacting the European

EMS industry in the period to 2015. EMS revenues are provided for individual countries and split by region. A

figure for the European EMS market by segment is also provided. Again for this edition, the report has also

analyzed the trends impacting the four principal groups of EMS company:

Global.

Multinational European

Sub-regional.

National.

Section 4 provides profiles of the top twenty EMS providers in Europe with an estimate of their sales for 2010.

The structure of the industry and a summary of the latest industry developments are also provided.

Section 5 provides a breakdown by country and region. For each section an overview of the electronics industry

is provided along with a summary of the key factors impacting the EMS industry. For each country or region we

have outlined the role the global “Tier 1” companies are playing along with profiles of the leading EMS

companies.

Section 6 is a directory of over 1000 manufacturing locations from over 700 separate companies. The directory

is split by country. Companies who are focused solely on cable and wire harnesses are not covered within the

directory.

For the this edition we have again provided a ranking of the Top 50 European EMS providers for 2010, the table

in Section 7 of the report.


12

Sample Pages Table 3.5 EMS Revenues for CEE and Other

Euro Millions 2010 2011 2012 2013 2014 2015

Czech Republic

Hungary

Estonia

Poland

Slovakia

Romania

Other

Figure 3.5 EMS Revenues in the CEE and Other

3.2.2.3 Europe EMS Revenues by Country

Table 3.6 lists all the principal countries with their associated forecast EMS revenues for the period 2010-2015

and the compound average annual growth rates (CAAGR). Overall we forecast that the EMS revenues will grow

at a faster rate in CEE, North Africa, Russia etc., due to the attractiveness of the lower labour rates in those

countries which will continue to drive migration of production from the West. The possible concern for restrictions

of skilled labour in the principal countries in CEE and North Africa has not materialised thus far although this may

arise if the migration to these low labour cost areas accelerates.


13

Key Characteristics:-

All have attributable European sales in excess of Euro 450 billion and some with European sales of

several billion.

All offer ODM services to different extents, although this appears to be reducing in significance.

Elcoteq is the only European headquartered company amongst the list, the others have their HQ in

either the USA or in Asia.

Their ability to leverage vertical integration for cost savings and response times is very high.

They have numerous manufacturing and repair facilities around the world, frequently with other

suppliers supporting worldwide OEM customers, and often in low labour cost countries.

Mobile & Consumer

Computer

Telecom Fixed

Medical

Industrial

Auto

Control & Instr.

Aero + Defence

Strategic Space Analysis – By Sector and Geographical

Group 1

Group 2

Group 3

Group 4

GlobalMultinationalEuropean

Sub‐RegionalNational

Figure 3.12 Strategic Space Analysis for the 4 EMS Groups

Group 2 -- Multinational European

Typically larger European EMS with lower cost manufacturing in either CEE, North Africa and often with

offices and plants in Asia, mostly China and India.

They concentrate most of their activities in the AMCIT sectors (Automotive, Medical, Control &

Instrumentation and Telecoms).

They typically have annual sales in the region of €550 million to €100 million, although a few are slightly

below the lower end.

They may have manufacturing, purchasing or sales operations in China and India but their customers

are predominantly in the European theatre.

Group 3 -- Sub-Regional

Typical annual sales of €25-100 million.

Almost all have manufacturing in Western European countries but many have plants in low cost

countries in Eastern Europe or North Africa.

The companies in this group tend to operate on a national or sub-regional level such as Nordic, Benelux

etc.

Most of their customers are within the AMCIT sectors.


14

4.3.14 Kitron

Kitron is the leading Norwegian EMS provider and one of the largest in Scandinavia, the company focusing on

four key segments data/telecom, defence/offshore, medical and industry. At the end of 2010, Kitron employed

1,112 people (Norway 531, Sweden 193, Lithuania 339 and other 49) and reported sales of NOK1,643.9 million.

Kitron is a medium-sized high mix-low volume company offering a full range of manufacturing services including

development and design through industrialisation, sourcing and logistics to manufacture, redesign and upgrading

of products to extend their life.

In June 2009, Kitron ASA signed an agreement to sell its Microelectronics business at Røros to some of the local

employees and Norbit AS. Kitron Microelectronics AS, which is not seen as a core business, has about 50

employees and had an annual turnover of NOK 128 million in 2008. The transaction closed in the summer of

2009.

In May 2010, Kitron AS signed an agreement to sell its Development Department located in Oslo to some of the

local employees and Simpro AS. Kitron Development has about 25 employees and had an annual turnover of

NOK 22 million and an operating loss NOK 11 million in 2009. At the same time Kitron has entered into a

cooperation agreement with the new company, Creo Development AS, for the provision of development services.

The sale is a part of the company’s strategy to increase its focus on industrialisation, test and new product

introduction while cooperating with third party development houses. The objective is to improve the complete

offering to the customers by combining the strengths of Kitron with dedicated development environments.

In September 2010, Finnish investment company Scanfil plc (now Seivi Capital) announced it had undertaken a

strategic investment and acquired a 32.96% stake in Norwegian EMS provider Kitron from Hermis Capital in a

transaction valued at NOK 143.9 million (around Euro 18.0 million). Seivi Capital’s principal investment is the

100% ownership of the Finnish company Scanfil EMS Group (see Section 5.4.4.15). The investment in Kitron

ASA is part of a move by Scanfil to strengthen its position and commitment to the international EMS market.

Kitron’s European manufacturing activities are split across four companies Kitron AB in Norway, Kitron AS in

Sweden, UAB Kitron in Lithuania and Kitron GmbH in Germany. In addition a subsidiary Kitron Sourcing AS is

responsible for sourcing activities for the whole group. In Norway, Kitron AS has a manufacturing facility in

Arendal. The manufacturing facility in Oslo was closed in 2006 and the plant in Horten in March 2009. In Sweden,

Kitron AB has facilities in Karlskoga and Jönkoping. The manufacturing activity in Flen was discontinued in the

second half of 2007.

In November 2010, Kitron announced plans to reorganise its Swedish operations to increase its competitiveness

and improve profitability. This plan involves the transfer of production to lower cost countries and to optimise the

production between the operating units in Sweden. The reorganisation will primarily affect the operation in

Karlskoga. The Karlskoga site will be downsized to a manufacturing site for defence customers and a customer

interface for Kitron’s entities in Lithuania and China within the medical segment. The Karlskoga operation will

continue to provide technical services to its customers. As part of the reorganization Kitron is also planning to

centralise all the administration functions to Jönköping in order to reduce indirect costs. An estimated 55 jobs

were cut through the restructuring.

In April 2010, Kitron UAB successfully completed the Railway Industry Standard (IRIS) certification audit. The

move is in response to new safety regulations in the railway industry, and to maintain strategically important

customers.

Kitron expanded into Germany in December 2009 through the acquisition of VERU Electronic GmbH in a deal

valued at Euro 700,000, on a debt free basis. The final deal was closed in early 2010 with VERU becoming a

wholly owned subsidiary. The new German unit will market Kitron’s complete range of manufacturing services

and act as a local centre for NPI (New Products Introduction) and small series manufacturing in Germany. For

larger series manufacturing Kitron will offer its facilities in Lithuania and later on in China as low cost alternatives,

while the facilities in Scandinavia will be offered for high complexity products.


15

In response to the requirements of its customers for manufacturing in Asia and North America Kitron have

established manufacturing facilities in China and the USA. In China, Kitron has entered into a lease agreement

with Nordic Industrial Park Co Ltd for a factory in Ningbo, China. The plant covers more than 4,000 sq m with the

production of low complex products beginning in the second half of 2010.

In June 2010, Kitron announced it would establish a fully owned subsidiary in Johnstown, Pennsylvania, USA.

The 20,000 sq ft plant started operations at the beginning of 2011 and will predominantly be concentrated

towards the defence industry.

At the beginning of 2010 Kitron’s subsidiary Kitron AB in Karlskoga received new orders from Maquet Critical

Care, a strategic customer within the Medical equipment segment. Kitron AB manufactures part of Maquet´s

ventilator platform for use in hospitals worldwide. Over a 6-month period new orders, in addition to normal

volumes, has been received for a total value of more than NOK 40 million.

In January 2010, Kitron ASA announced it had received new orders from Kongsberg Defence and Aerospace

totalling about NOK 28 million. The orders concern complex communication equipment and are for delivery

during 2010 and first half of 2011.

In February 2010, Kitron AS announced it had been awarded a new industrial project as part of a long term

relationship with Danaher Motion Stockholm AB. The agreement covers development, industrialisation and

manufacturing services, and represents a strengthening of the existing co-operation between the two companies.

The scope of the project represents a total value of more than NOK 100 million over five years. Kitron’s

expansion into China played an important role in the extension of the

In May 2010, Kitron Microelectronics AB in Jönköping, Sweden signed a strategic cooperation agreement with

Atlas Copco Tools AB. The agreement will be worth about NOK 45 million annually in the long run, and includes

electronics manufacturing and assembly of industrial tools. Planned manufacturing start is from the third quarter

of 2010.

In a separate announcement Kitron subsidiaries Kitron AB, Sweden and Kitron UAB, Lithuania have recently

acquired four new customers with a volume of NOK 180 million over three years. The first deliveries will start in

Q4 2010. The products are within the Industrial and Energy segments.

In September 2010, Kitron ASA's subsidiary Kitron AB in Karlskoga, Sweden, has received new orders from BAE

Systems AB of about NOK 26 million. The orders concerns manufacturing and technical service of

complex control systems for the Archer project. Deliveries will take place in 2011 and 2012.

In April 2011 Kitron announced two major orders. Kitron AS signed a contract with a leading supplier of medical

equipment. The agreement implies that Kitron AS for some specific products will be the sole supplier in 2011 and

2012. In this period the expected turnover linked to the contract is between NOK 350 million and NOK 400

million. Kitron already has received orders under the contract totalling to NOK 75 million. The company also

announced that there are possibilities for extension of the agreement after the current two year period.

Kitron subsidiary Kitron Microelectronics AB in Jönköping, Sweden, has entered into a Letter of Intent (LOI) with

a leading supplier of optical networking solutions. The LOI express the intention of the parties to continue its co-

operation until the end of 2014 and to strive for competitive pricing of the products. Kitron estimates the potential

sales value to more than NOK 400 million up to the end of 2014.

Kitron in May 2011 announced it had received a US$3.9 million (NOK 22.5 million) contract from Lockheed Martin

to produce the Integrated Backplane Assembly (IBA), for deliveries to the F-35 Low Rate Initial Production

program, called LRIP 5. The delivery starts second half of 2011 and ends first half of 2013. Norway is one of the

international partner countries participating in the F-35 program. Under the manufacturing license agreement

between Kitron ASA and Lockheed Martin Mission Systems and Sensors, Kitron will manufacture, test, maintain

and repair the IBA in the F-35 Joint Strike Fighter.


16

In June 2011, Kitron received a US$3.2 million (about NOK 17 million) contract from Kongsberg Defense

Corporation to deliver electronics. Kitron will manufacture components for the Common Remotely Operated

Weapon Station (CROWS II) contract that Kongsberg Defence Corporation has with the US Army. Kongsberg

Defense Corporation is a wholly owned subsidiary of the Kongsberg Group. The work will be performed at

Kitron's new manufacturing facility, located in Johnstown, Pennsylvania.

Kongsberg is a long standing customer. In April 2011, Kitron signed a five year manufacturing agreement with

Kongsberg related to deliveries of electronics to the NSM (Naval Strike Missile). The parties have also agreed on

a letter of intent to co-operate in the first phase of the manufacturing of electronics for the JSM (Joint Strike

Missile). In connection with the signing of the agreement Kitron has received the first order for the NSM, which

amount to NOK 15 million, and is for delivery in the first half of 2012.

In July 2011, Kitron and Prevas AB, the Nordic leader for embedded systems and industrial IT, announced a

strategic co-operation to jointly work together to provide customers support throughout their value chain including

product & test development, industrialization, sourcing, manufacturing, logistics, redesign and other after sales

services. In co-operation Prevas and Kitron will assist the customer to think product life cycle from the beginning

and by using a joint Component Information System (CIS) help standardizing and optimizing the products and

cost structures. This cooperation strengthens further the already market leading positions of both Prevas and

Kitron within embedded systems, product development and Electronic Manufacturing Services in the Nordics as

well as giving a good platform for further developments outside the Nordics.

Kitron Group Financial Highlights – Year end December

In 2010, revenue in the Data/Telecoms segment declined by 9.4% to NOK 396.2 million. This represented 24.1%

of the group’s revenue (2009: 25.3). The reported loss of a major Data/Telecoms client is having a negative effect

on the development for the segment. The client will be phased out from end of Q1 2011 and the annual impact is

estimated to NOK 100 million although this is expected to be offset by new business from existing and new

customers. The Defence segment decreased by 4.3% in terms of revenue from NOK 369.4 million in 2009 to

NOK 353.4 million in 2010. The segment accounted for 21.5% (2009: 21.3%) of the group’s total revenues. Kitron

is currently involved in defence programs with among others the Kongsberg Group and Lockheed Martin that

could yield more than NOK 1 billion in revenue in the years to come. The Industry segment increased revenue by

20.1% to NOK 302.9 million (2009: NOK 250.4 million), accounting for 18.4% of the group’s total revenue (2009:

14.5%). Revenue in the Medical equipment segment increased by 21.1% to NOK 504.1 million in 2010 (2009:

NOK 416.2 million), corresponding to 30.7% of the group’s revenue (2009: 24.0%). The Medical equipment

segment is less cyclical than other market segments. Kitron focuses on additional growth in this segment and

expects a long-term positive development. The Offshore/Marine segment decreased by 66.1% in terms of

revenue from NOK 257.3 million in 2009 to NOK 87.3 million in 2010. The segment accounted for 5.3% (2009:

14.9%) of the group’s total revenues. In the last year there has been a sharp drop in demand from the offshore

segment but has since stabilised and the company expects the segment to start to recover in 2011.

Sales by Market

NOK millions 2010 2009 2008

Defence 353.4 369.4) 698.7

Offshore/Marine 87.3 257.3)

Data/Telecom 396.2 437.4 541.3

Medical 504.1 416.2 431.9

Industrial 302.9 250.4 440.6

Total 1643.9 1730.7 2112.5


17

Sales by Geographical Area


Norway 893.2 1038.3 981.0

Sweden 646.8 595.3 963.0

Rest of Europe 35.5 48.2 76.7

USA 68.4 47.0 60.6

Other - 1.9 31.2

Total 1643.9 1730.7 2112.5

Sales by Business Area

NOK Million 2010 2009 2008

Kitron AS (Norway) 1088.8 1143.9 1322.4

Kitron AB (Sweden) 389.7 362.4 498.8

UAB Kitron (Lithuania) 282.0 336.1 421.7

Other & Eliminations (116.6) (111.7) (130.4)

Total 1643.9 1730.7 2112.5

Operating Profit/(Loss) by Business Area

NOK Million 2010 2009 2008

Kitron AS (Norway) 41.8 48.3 106.3

Kitron AB (Sweden) (42.3) (0.5) 27.5

UAB Kitron (Lithuania) 21.1 21.0 33.6

Other & Eliminations (12.7) (4.8) (6.6)

Total 7.9 64.0 160.8

Leading Financial Indicators


Net Sales 1643.9 1730.7 2112.5

Operating Profit/(Loss) 7.9 64.0 160.8

Net Profit/(loss) (25.4) 8.2 214.3

Capital Expenditure 47.1 27.6 76.3

Total assets 1015.5 982.2 1250.2

Revenue amounted to NOK 860.5 million in the first six months of 2011, which represents a 2.8% increase

compared with the same period in 2010. The order intake was NOK 805.2 million and the order backlog was

NOK 781.4 million, a decrease of 12.0% and 10.0% respectively. The general trend within Kitron’s market

segments is positive although concerns remain about the global economic recovery and outlook. The reduction in

order intake and backlog compared to the first half last year is mainly due to the fact that customers are reducing

the order lead time as the component market is normalising and as such not having any major impact on

revenue. Kitron group’s revenue in the second quarter was 1.2% higher than in the same period in 2010, and

amounted to NOK 430.7 million (Q2 2010: NOK 425.7 million). Revenue in the market segment Energy/Telecoms

was down 44.1%, Defence/Aerospace was down 5.0%, Industry increased by 39.3%, Medical equipment was

down by 2.9% and Offshore/Marine was up 165.5% compared to the second quarter of 2010. Revenue in the

Norwegian operation represented 57.3 % of Kitron’s gross revenue during the second quarter (Q2 2010: 62.2%).

The Swedish operation represented 22.3% of the group (Q2 2010: 23.1%) and Kitron’s operation in Lithuania

provided for 20.3% (Q2 2010: 14.7%). Kitron’s revenue in the second quarter of 2011 was distributed as follows:

Energy/Telecoms 13% (Q2 2010: 23%); Defence/Aerospace 23% (Q2 2010: 25%); Industry 24% (Q2 2010:

17%); Medical equipment 29% (Q2 2010: 31%); and Offshore/Marine 11% (Q2 2010: 4%).


18

5.2 Germany 5.2.1 Electronics Industry Overview

Germany is Europe's largest electronics producing nation and is generally diversified in the range of products it

has to offer. Most sectors contribute extensively to the domestic market, as well as individual segments claiming

sizeable shares of the world market.

Control and instrumentation is the largest sector, accounting for around 30% of German production in 2009 with

computer equipment accounting for 12%, radio communications equipment 5.8%, telecommunications 4.9% and

medical 7.6%. Components accounted for 33.5% of the total.

In 2009, electronics production declined by a more than anticipated 19.5%, in part due to the impact of the global

recession but also due to the closure or scaling back of production in the computing, communications and

consumer audio segments.

Table 5.2 Summary of German Electronics Production

Euro Millions 2006 2007 2008 2009 2010 2011 2012 2013 2014

Computing 9721 9513 8347 5477 5618 5708 5685 5391 5111

Industrial 18935 19925 20599 17832 20322 21091 22146 23088 24047

Communications 12730 9673 6124 4604 4930 5029 4993 4948 4907

Consumer 1736 1862 1542 765 702 671 629 591 557

Components 15370 16560 16944 14422 16594 17119 17655 18120 18549

TOTAL 58492 57533 53556 43100 48167 49619 51108 52138 53171 Notes: Computing includes office equipment; Industrial combines control and instrumentation and medical and industrial; and communications

combines fixed and wireless communications (inc defence). Due to computer rounding the summary figures above may differ slightly from the

figures presented in the main tables.

Production in 2010 rebounded on the back of strong growth in exports and a better than expected domestic

economy. The electronics industry was also boosted by the return to growth in automobile production and

increased demand for electronic components.

Figure 5.3 German Electronics Production - % Growth by Sector 2009-2014

Germany’s electronics industry is dominated by industrial electronics and in particular control and

instrumentation, medical and automotive. After declining in 2009, control and instrumentation increased by 18%

in 2010, led by a surge in exports and solid growth in the domestic economy. Medical and industrial also showed

growth in 2010 although the increase was in the single-digits.

-60

-50

-40

-30

-20

-10

0

10

20

2009 2010 2011 2012 2013 2014

% G

row

th

Computing Industrial Communications Consumer Componnets Total


19

5.4.3 Global “Group 1” Companies

The Global “Tier 1” companies gained a strong position in the Nordic market through a series of acquisitions but

have more recently closed, sold or scaled back operations.

Flextronics: Flextronics through its Special Business Solution unit has manufacturing operations in Skive,

Denmark, which was acquired from Bang & Olufsen, and Karlskrona, Sweden. The company reportedly is closing

its plant in Billingstad, Norway following the cancellation of a major contract and in August 2011 it was also

reported that the company planned to close the plant in Skive by the end of the year.

Elcoteq: Elcoteq has a limited presence in the Nordic countries with only product development and technical

support offices in Finland and Sweden. In August 2011, the three subsidiaries in Finland filed for bankruptcy as a

result of the company’s severe financial difficulties.

Sanmina-SCI: Sanmina-SCI has now only one enclosure facility in the region in Salo, Finland following the

closures of two plants in Sweden (Kista and Forserum). EMS operations are located in Haukipudas, Finland and

Örnsköldsvik, Sweden, the site in Haukipudas also acts as a NPI manufacturing operation. A second NPI facility

is located in Salo, Facility.

5.4.4 Other Leading EMS Companies to the Nordic Countries

Outside of “Group 1”, the Nordic region has a well established EMS industry although in recent years, and

mirroring developments in the rest of Western Europe, a number of facilities have been scaled back or closed. In

addition to transferring production to the Far East, Nordic EMS providers have established a strong presence in

the Baltic States and Poland.

5.4.4.1 BB Electronics

BB Electronics, with headquarters in Horsens, was initially established in 1975 as a manufacturer of PCBs and

provider of assembly services to the Danish electronics market. In 2010, the company reported sales of DKK 703

million (2009: DKK 553 million) and a net profit of DKK 5.0 million. Axcel, one of the leading industrial investment

companies in Denmark is the major shareholder in the company with a 62.5% stake. At the end of 2010 the

company employed 706 people down from 673 a year earlier of which 272 were in Denmark (2009: 320) and 434

in China (2009: 353).

BB Electronics offers a range of services from new product introduction, global sourcing, manufacturing,

integrated logistics and after sales for principally the industrial, medical and telecom markets.

The company has two production plants, one in Denmark and one in China:

BB Horsens - 13,500 sq m. The plant focuses on high quality, high flexibility products which have a high

mix of components and short delivery time. The facility is approved to ISO 9000, ISO 14001, OHSAS

18000 and ISO 13485. The plant has three Siemens SMT lines and three Fuji SMT lines.

BB Suzhou, China – 6,000 sq m. The plant offers high volume production of low to medium complexity

electronics. The facility is approved to ISO 9001, ISO 14001 and ISO 13485. The plant has two Fuji SMT

lines.

In November 2007, BB Electronics opened a new technology facility close to the company’s Horsens

headquarters. The 1,600 sq m building and will become the centre for the company’s activities within

development of electronics and mechanics. Besides manufacturing of prototypes the facility also included a

production environment with advanced production and test technologies such as 3-D x-ray. The centre has


20

6 DIRECTORY

6.1 Austria

Company: AB Mikroelektronik GmbH

Address: Josef.-Brandstätter Straße 2, 5020 Salzburg, Austria

Tel: +43 662 44991-0

Fax: +43 662 420489 10

Website: www.ab-mikro.at

Parent Company: TT electronics, UK

Note: The company is focused on hybrid technology and mechatronics

Company: AlliedPanels

Address: AlliedPanels Park 1, 4873 Frankenburg, Austria

Tel: +43 7683 20111

Fax: +43 7683 20031

Website: www.celestica.com

Parent Company: Celestica, Canada

Company: Becom Electronics GmbH

Address: Technikerstr. 1, 7442 Lokenhaus, Austria

Tel: +43 2616 2930 0

Fax: +43 2616 2930 112

Website: www.becom.at

Sales: Euro 41 million (2010)

Parent Company Bewag

Company: CMS Electronics GmbH

Address: Ebentaler Str. 140, 9020 Klagenfurt, Austria

Tel: +43 463 3834 0

Fax: +43 463 3834 417

Sales: Euro 41 million (2010)

Website: www.cms-electronics.at

Company: Flextronics International

Address: Friesacher Strasse 3, 9330 Althofen, Austria

Tel: +43 426226441100

Fax: +43 4262 2645

Website: www.flextronics.com

Parent Company: Flextronics, Singapore

Company: Graf Elektronik GmbH

Address: In Steinen 5, 6850 Dornbirn, Austria

Tel: +43 5572 9020 0

Fax: +43 5572 9020 255

Website: www.grafgroup.com

Company: Jabil Circuit Austria GmbH

Address: Gutheil Schoder Gasse 17, 1232 Vienna, Austria

Tel: +43 1 66105 3423

Fax: +43 1 66105 3077

Website: www.jabil.com

Parent Company: Jabil Circuit, USA


21

Company: United EMS Ltd

Address: 28 Melford Court, Hardwick Grange, Warrington WA1 4R2, United Kingdom

Tel: +441925 838300

Fax: +44 1925 837259

Website: www.unitedems.co.uk

Company: VC Electronics

Address: Unit 14, Commercial Road, Goldthorpe Industrial Estate, Rotherham S63 9BL, United Kingdom

Tel: +44 1709 880002

Fax: +44 1709 881112

Website: www.vcelectronics.com

Company: Walkbury Electronics Ltd

Address: 30 Metro Centre, Welbeck Way, Peterborough, Cambridgeshire PE2 7UH, United Kingdom

Tel: +44 1733 404830

Fax: +44 1733 404839

Website: www.walkbury.co.uk

Company: Walters Group

Address: 12 Merlin Centre, Lancaster Road, Cressex Industrial Estate, High Wycombe HP12 3TB, United

Kingdom

Tel: +44 1494 795100

Fax: +44 1494 461107

Website: www.waltersgroup.co.uk

Company: Weeden Electronics Ltd

Address: Unit 66, Wilburn Way, Hitchin, Herts SG4 0TP, United Kingdom

Tel: +44 845 658 2400

Fax: +44 845 658 2478

Website: www.weedone-elctronics.com

Company: Wilson Process Systems

Address: Waterworks Road, Hastings, East Sussex TN34 1RT, United Kingdom

Tel: +44 1424 722222

Fax: +44 1424 720730

Website: www.wps.co.uk

Company: Xitek Ltd

Address: Unit B2, Haysfield Business Centre, Spring Lane North, MalvernWorcs WR14 1GF, United Kingdom

Tel: +44 1684 899125

Fax: +44 1684 899178

Website: www.xitek.co.uk

Company: Zeal Electronics Ltd

Address: Church View Business Park, Coney Green, Clay Cross, Chesterfield, Derbyshire S45 9HA, United

Kingdom

Tel: +44 1246 252430

Website: www.zeal-electronics.co.uk

The European Electronic Manufacturing Services Industry 2010-2015

A Strategic Study of the European EMS Industry

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